Buying off-plan property in Spain is safe when you choose developers with bank guarantees (aval bancario). Spanish law requires all stage payments to be protected by bank guarantees—if the developer fails to deliver, you get a full refund plus interest. Always verify guarantees exist before making any payment.
Buying off-plan—purchasing a property before or during construction—offers significant advantages in Spain's Costa Blanca market. You can secure today's prices, customize finishes, and often achieve better value than completed resales. However, off-plan purchases require understanding specific processes and protections.
This guide explains exactly how off-plan buying works in Spain, the legal safeguards protecting your investment, and practical steps to ensure a smooth purchase. Whether you're considering a Contrimar villa at La Finca or an apartment development in Torrevieja, these principles apply.
Why Buy Off-Plan?
Off-plan purchasing offers several compelling advantages:
Price advantage: Developers typically offer early-bird pricing to generate cash flow and demonstrate demand. Buying at launch can mean 5-15% savings versus completed unit prices.
Choice: Early buyers get first pick of plots, orientations, and floor plans. Corner units, best views, and preferred positions go to those who commit early.
Customization: Most developers allow specification changes before construction reaches certain stages. Upgrade kitchens, modify bathrooms, change flooring—personalization that's expensive or impossible with resales.
Payment spread: Rather than finding the full purchase price immediately, off-plan allows staged payments over 12-24 months of construction. This suits many buyers' financial planning.
New build condition: No renovation surprises, no inherited problems. Modern building standards, energy efficiency, and full warranties.
The main trade-off is time—you're waiting 12-24 months for completion. For holiday home buyers or those planning ahead, this is rarely problematic.
The Off-Plan Purchase Process
Here's how a typical off-plan purchase unfolds:
You pay a reservation fee (typically €6,000-10,000) to take a property off the market. This is usually held by the developer or in escrow. You'll receive a reservation document specifying the property, price, and timeline for next steps.
Within 2-4 weeks, you sign the private purchase contract (contrato privado de compraventa). This legally binding document details everything: full specifications, payment schedule, completion date, and penalty clauses. You pay 30% of the purchase price minus the reservation fee.
Payments are tied to construction milestones. A typical schedule:
Schedules vary by developer. Some require fewer, larger payments.
When the property is finished and has its license of first occupation, you complete at the notary. Pay the remaining balance (typically 30%), sign the escritura (title deed), and receive keys. The property is registered in your name.
Bank Guarantees (Aval Bancario): Your Essential Protection
What is an aval bancario? A bank guarantee (aval bancario in Spanish) is a legal document from a Spanish bank that guarantees your off-plan payments will be returned if the developer fails to deliver.
Spanish law (Ley 57/1968, updated by Law 20/2015) requires developers to provide bank guarantees or insurance for all payments made before completion. This is your critical protection.
How it works: For every stage payment you make, the developer must provide a bank guarantee (aval bancario) for that amount. If the developer fails to complete the property—for any reason—you can claim against these guarantees to recover your money.
What to check:
Red flags:
Your action: Never make any stage payment without receiving the corresponding bank guarantee first. Your lawyer should verify each guarantee before you release funds. This is non-negotiable.
Legal Representation: Essential, Not Optional
Independent legal representation is essential for off-plan purchases. Your lawyer should:
Before signing anything:
During construction:
At completion:
Cost: Legal fees typically run 1-1.5% of purchase price. For a €350,000 villa, that's €3,500-5,250. This is not an expense to cut—inadequate legal oversight has cost buyers far more.
Choose a lawyer experienced with Costa Blanca off-plan purchases. They'll know the developers, the common issues, and how to protect your interests.
Understanding Your Contract
The private purchase contract is the governing document for your off-plan purchase. Key elements to understand:
Property specifications: Exact description of what you're buying. Plot size, built area, number of rooms, included features. Annexes should include detailed specifications for finishes, appliances, and fixtures.
Payment schedule: Dates or milestones for each payment. Ensure these align with construction progress—you shouldn't pay for work not yet done.
Completion date: The developer's commitment for when you'll receive keys. Spanish contracts often include a "grace period" (typically 3-6 months) before penalties apply. Understand what this means.
Penalty clauses: What happens if either party defaults. Standard clauses allow you to walk away (losing deposit) or the developer to cancel (refunding your money). More protective clauses compensate you for delays.
Specification changes: Your rights to modify finishes, and the process for doing so. Also the developer's right to make changes—these should be limited to equivalent or better alternatives.
Bank guarantee provisions: Explicit requirement for guarantees on all payments. This should be unambiguous.
Have your lawyer explain every clause. Never sign a contract you don't fully understand.
Taxes and Costs on New Builds
New build purchases have different tax treatment than resales:
New builds attract 10% IVA rather than the transfer tax (ITP) applied to resales. This is charged on the property value.
Documented Legal Acts tax applies to new builds in addition to IVA. Rate varies slightly by region; 1.5% applies in Valencia region.
This compares to 10% ITP on resales in Valencia region. New builds are marginally more expensive tax-wise.
Other costs:
Total to budget: 13-15% above purchase price covers all costs comfortably.
Payment timing: IVA and AJD are payable at completion. Factor this into your funding arrangements—you'll need the balance plus approximately 12% available at notary signing.
Customization and Upgrades
One advantage of off-plan is customization. Here's how it typically works:
Standard specification: The base contract includes defined finishes—tiles, kitchen units, sanitary ware, etc. Reputable developers provide detailed specification sheets.
Upgrade options: Developers usually offer upgrade packages or à la carte options. Common upgrades include:
Process: Request changes early, ideally before signing the main contract or very soon after. Changes become more difficult (and expensive) as construction progresses. Get all changes in writing with clear pricing.
Timing windows: Developers set deadlines for specification changes, tied to construction stages. Miss the deadline for tile selection, and you get the standard option. Understand these windows upfront.
Cost-effectiveness: Some upgrades offer good value through the developer (they buy in bulk). Others may be cheaper to arrange independently after completion. Your agent can advise.
Construction Monitoring and Snagging
You're entitled to monitor construction progress and identify defects:
Site visits: Most developers welcome buyer visits during construction, with reasonable notice. Visit at key stages—foundations, structure, pre-completion—to see progress and raise any concerns early.
Progress updates: Good developers provide regular updates with photos. If updates aren't forthcoming, ask. Silence shouldn't mean problems, but communication matters.
Pre-completion snagging: Before final payment and key handover, conduct a thorough snagging inspection. This identifies defects or incomplete work that the developer must remedy.
What to check during snagging:
Snagging process: Document all issues in writing with photos. The developer should remedy these before or shortly after completion. Retain a portion of the final payment (typically via your lawyer) until snagging items are resolved.
Professional snagging: Consider hiring a professional snagger (€200-400) for an expert inspection. They catch things untrained eyes miss.
Common Pitfalls to Avoid
Learn from others' mistakes:
Paying without bank guarantees: The single biggest risk. Never pay any construction-stage amount without receiving the corresponding bank guarantee first. No exceptions.
Skipping legal representation: False economy that can cost thousands. Independent lawyers protect your interests in ways agents and developers cannot.
Not reading the contract: Signing documents in a language you don't understand, or trusting verbal assurances. Get everything in writing, translated if necessary.
Ignoring specification details: Assumptions about what's included lead to disappointment. If it's not in writing, it's not included.
Missing customization deadlines: Wanting to change tiles after they're already laid. Understand timelines and make decisions promptly.
Underfunding completion: Not having the balance plus taxes available when the property completes. This can mean losing the property and your deposits.
Choosing on price alone: The cheapest developer isn't always the best value. Track record, build quality, and after-sales service matter.
Not visiting during construction: Discovering major issues at completion that were visible months earlier. Stay engaged throughout the process.
Choosing the Right Developer
Developer quality varies significantly. Here's how to assess:
Track record: How many developments have they completed? Can you visit finished projects? Speak to previous buyers if possible.
Financial stability: Established developers with banking relationships can provide proper guarantees. New or undercapitalized developers may struggle.
Build quality: Visit completed developments. Look at finishes, common areas, and landscaping after a few years of use. Quality shows over time.
Reputation: Search online for experiences. Check property forums and social media. Patterns of complaints are red flags.
After-sales service: How do they handle warranty claims? Developers who disappear after completion leave owners to fix problems themselves.
Transparency: Willingness to answer questions, provide documentation, and accommodate reasonable requests. Evasiveness suggests problems.
Local examples: Builders like Contrimar have operated in Costa Blanca for decades, completing numerous developments at La Finca and elsewhere. This longevity demonstrates reliability. Newer developers require more scrutiny.
The Bottom Line
Buying off-plan in Spain offers excellent opportunities when approached correctly. The combination of price advantages, customization options, and new build quality makes it attractive for many Costa Blanca buyers.
The keys to success are straightforward: choose a reputable developer, engage independent legal representation, never pay without bank guarantees, and stay engaged throughout construction. Follow these principles, and off-plan buying is a safe and rewarding way to acquire your Spanish property.
Considering an off-plan purchase in Costa Blanca? We work with established developers across the region and can guide you through the entire process. Contact us to discuss current opportunities and how off-plan buying could work for you.
Interested in properties in this area? Book a free 30-minute consultation with our team — with over 12 years of experience, we'll help you find exactly what you're looking for.